While Wall Street clawed back most of its losses in early trade, markets have since run out of steam as investors retreated to safer havens such as gold which pushed ahead to fresh highs of $1,878 an ounce.

One of the few rays of light for investors came from the technology sector after the announcement that Hewlett-Packard planned to buy UK software firm Autonomy in a multi-billion deal.

When European markets closed, US indices were mixed on investor concern.